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IBM's financial services cloud offers developer opportunity

IBM hopes to bring developers to its new financial services cloud that runs on the IBM Cloud platform and uses Red Hat OpenShift as its Kubernetes environment.

IBM has launched a public cloud that targets financial services organizations with hopes to bring developers in line with the new platform.

Based on the IBM public cloud, this new financial services cloud will require developers working with IBM tools, Red Hat tools and open source technology to build applications within the platform's guardrails. As software developers have become the new kingmakers, IBM needs developers to adapt to its new financial services cloud and must equip these developers with the proper tooling to support the platform.

"We have a very open hand with regard to how developers want to use the public cloud," said Hillery Hunter, VP and CTO of IBM Cloud. "We have our DevOps environments. We have our cloud-native Kubernetes environment [IBM Cloud Kubernetes Service] and Red Hat Open Shift environment as well. And many people do also bring their own tools."

The IBM Cloud for Financial Services provides the kind of cloud-native, automation-driven environment that today's developers expect out of a public cloud, she said. This platform is not a mishmash of separate, different private clouds or a hosted computing environment, Hunter noted.

The financial platform will provide the benefits of a public cloud but in a secure environment that meets all the requirements of the highly regulated banking industry, according to IBM. And the new cloud does indeed meet the regulatory and compliance, security and data protection requirements of the financial services sector, Hunter explained.

Charles KingCharles King

There are two issues that make IBM's financial services cloud particularly interesting, said Charles King, an analyst at Pund-IT in Hayward, Calif.

"First, the financial industry is among the most highly regulated and security-focused sectors worldwide," he said. "Second, it has good reason to be that way since banks and other financial institutions are commonly targeted by global cybercriminals. Think of this as a 21st century version of legendary robber Willie Sutton's answer to why he targeted banks: 'Because that's where the money is.'"

Bank of America cosigns IBM financial services cloud

Historically, banks have been leery of public clouds chiefly because of security and regulatory concerns. In collaboration with Bank of America, the first client for this platform, IBM co-designed the financial services cloud, and claims to offer the only industry-specific public cloud platform that provides preventative and compensatory controls for financial services regulated workloads, multi-architecture support and automated security that employs high-level, certified encryption.

We have a very open hand with regard to how developers want to use the public cloud.
Hillery HunterCTO, IBM Cloud

Meanwhile, AWS, Google, Oracle and Salesforce all have financial services clouds that clients are moving workloads to for the flexibility to scale and to innovate faster. However, none of these offerings seem to be as comprehensive in meeting the regulatory requirements that the IBM platform does, King said.

The financial services cloud could help IBM carve out a niche to take on larger public cloud suppliers, including AWS and Microsoft, by targeting specific markets.

Value proposition for developers

However, there is certainly value in this new targeted banking cloud proposition, notably for developers, said Ron van Wezel, a senior analyst for Boston-based Aite Group in Amsterdam.

"Banks are developing ecosystems with FinTechs small and big that connect to the bank's services via APIs to develop new experiences for the banks' and FinTechs' clients," he said.

Not only will this IBM managed cloud platform help FinTechs meet a certain threshold set of compliance and security requirements, it will make it easier for these companies to work with the large banks.

"The latter will have additional or specific requirements, but the heavy lifting will only have to be done once when they are onboarded on the platform," Van Wezel said. "For the banks, life will be easier as well, as they can trust that the FinTech already meets the platform's requirements."

IBM enlisted the assistance of Washington, D.C.-based Promontory Financial Services, a global financial services consulting firm IBM acquired in 2016, to help design the new cloud platform.

IBM's financial services cloud will run on the IBM public cloud and employ the Red Hat OpenShift containerization software as its Kubernetes environment to manage containerized software across the enterprise. OpenShift includes more than 190 API-driven, cloud-native services to create new applications.

In August, IBM transformed its software portfolio to be cloud-native running on OpenShift. The company introduced new cloud-native capabilities to its core software via pre-integrated components called IBM Cloud Paks.

"We offer a fully managed service where you pick the types of machines that you want, and then we manage the deployment fully as a service of that OpenShift Kubernetes environment," Hunter said. "It provides self-healing and automated failover."

And the OpenShift environment features automation to deploy Cloud Paks that have been pre-loaded in the cloud platform so they can be deployed quickly, Hunter said.

At launch, IBM introduced five Cloud Paks: Cloud Pak for Data, Cloud Pak for Applications, Cloud Pak for Integration, Cloud Pak for Automation and Cloud Pak for Multicloud Management.

Overall, IBM needs to make this new platform easy to adopt, which translates to making it easy for developers, too.

"If IBM gets the approach right, it needs to make it easier for financial enterprises to move to its cloud," said Holger Mueller, an analyst at Constellation Research in San Francisco. "Partnerships with leading institutions like Bank of America should ensure that IBM gets this right. But the real proof will be in a few months -- if other financial enterprises have joined."

Yet, in particular, IBM said "only ISV or SaaS providers that demonstrate they comply with the platform's policies will be eligible to deliver offerings through the platform."

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